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they claimed for 1990 and 1991. Rather, receipt of the insurance
proceeds without repair to the truck required Ruckman, Inc., to
make a downward adjustment to its basis in the truck under
section 1016. Indeed, the insurance proceeds received by
Ruckman, Inc., exceeded its basis in the truck, which would
preclude any casualty loss as a result of the accident and would
instead ordinarily produce taxable gain. However, because
respondent has not sought to amend the pleadings to assert an
increased deficiency, we will sustain the determination that
petitioners sustained a casualty loss of $5,576 in 1990.
3. Negligence
Respondent determined that petitioners were liable for an
accuracy-related penalty pursuant to section 6662(b)(1) on the
basis of their failure to report $18,063 in dispatch income for
1991 that was received from Happy Trucking and reported on a Form
1099 issued to Ruckman, Inc. Respondent argues that petitioners
are liable for the accuracy-related penalty under section
6662(b)(1), which imposes the penalty on the portion of an
underpayment which is attributable to "Negligence or disregard of
rules or regulations." Petitioners argue that the penalty should
not apply because the omission from reported income, which they
concede occurred, resulted from Mrs. Ruckman's incapacitation due
to illness.
"Negligence" for these purposes includes "any failure to
make a reasonable attempt to comply with the provisions of [the
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